Burma’s Realtors, Bankers Asked to Report Potential Money Laundering

By Kyaw Hsu Mon 28 August 2014

RANGOON — Burma’s Financial Intelligence Unit (FIU) this month encouraged real estate agents and bankers to report transactions involving large sums of cash, amid suspicions that money laundering is rife in both the country’s property market and financial institutions.

The unit’s chief said last week that the FIU was stepping up activities to identify where the ill-gotten gains of Burma’s drug traffickers, corrupt officials and other criminals are being invested.

But new rules and regulations relating to the Anti-Money Laundering Law are not expected until October, so the FIU appears to be relying for now on voluntary reporting from those who potentially stand to benefit from money laundering.

People in the country’s booming real estate sector told The Irrawaddy that they were told they should inform the FIU, part of the Ministry of Home Affairs, about any property transactions worth in excess of 100 million kyat, or about US$100,000.

“The FIU told us to report to them if a property contract is worth more than 100 million kyat. Also, if one person purchases three or four properties in a year, we have to report them too,” said Moe Moe Aung, Secretary of Myanmar Real Estate Association.

It is unclear whether a duty to report such transactions will be included in the forthcoming rules and regulations. Neither is it known what, if any, sanctions anyone failing to report would face.

Moe Moe Aung said the FIU’s chief, Police Colonel Kyaw Win Thein, told her that the reporting was for the purpose of “surveying” where money in the market is coming from. However, she quoted the police colonel as saying, “If they [the FIU] doubts them [the buyer], we’re authorized to investigate.”

Under the current law, the government collects tax on property transactions—the combined income tax and stamp duty combined is 35 percent on transactions worth more than 300 million kyat—but buyers are not obliged to divulge the source of the money.

“By law, the government doesn’t ask buyers the source of their money, that’s why the real estate sector has becomes the best place for money laundering,” Moe Moe Aung said.

“The property market has been stronger in recent years. This [money laundering] is not the only reason real estate prices have been skyrocketing in cities, but it’s one of them.”

The FIU’s Kyaw Win Thein told reporters last week that banks would also be asked to report savers with large amounts of cash. “In the banking sector, we are going to announce soon how much is the exact figure above which banks will need to report us,” he said.

Burmese tycoon Chit Khine—the chairman of Eden Construction and Myanmar Apex Bank who has been linked to members of Burma’s former military regime—said he welcomed the move, but warned that if the FIU investigates all large-scale deals, those doing business with clean money could face delays.

“They will have to check out who owns the money, whether it’s in the hands of local businessmen or not—they will have to question that. But there might be disadvantages for some people,” Chit Khine said.

“For example, though it’s good [to investigate] dirty money owners who invest in the real estate industry, it’s not good for other clean people. If they investigate where the money comes for every contract to buy a house, it may take time for everyone.”

Additional Reporting by Thit Nay Moe